Wal-MartWMT-0.25% says it followed its play book when it yanked its business from a Bangladesh garment factory after the retailer's inspectors found problems. But the chain's clothing was still being produced there when the factory went up in flames last weekend, leaving at least 112 workers dead.

The retailing giant's experience in Bangladesh underscores the difficulties Western companies face in policing far-flung factories, and highlights gaps critics say make these efforts ineffective. Even when companies find problems at plants, they say, the issues often aren't revealed to the public or to government officials.

Wal-Mart Stores Inc.'s in-house Faded Glory brand clothing was among the more than a dozen Western brands found by activist groups that scoured the factory's charred remains for labels following the fire. Three managers at the factory were detained by Bangladesh authorities Wednesday on suspicion that they had blocked doors before the fire, preventing many workers from escaping.

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The world's largest retailer said it had revoked the factory's authorization to make its products months before the fire, but declined to elaborate. It would not name the supplier it said was responsible for giving its business to Tazreen Fashions Ltd., a modern factory set up in 2007 near the Bangladeshi capital of Dhaka.

The parent of the Tazreen Fashions factory, Tuba Group, and its owner, Delwar Hossain, haven't publicly discussed the fire and couldn't be reached for comment.

Mahbub Rahman, who says he is a marketing manager for Tazreen, said in an interview Thursday that his company got the business from another Bangladeshi factory that could not meet its Christmas orders from a Wal-Mart supplier.

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Pants with an inhouse Wal-Mart brand at the scene of the factory fire.
BGIWF/BCWS/Agence France-Presse/Getty Images

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Bangladesh has become the world's second-largest clothing exporter, thanks in part to some of the lowest labor costs anywhere: The government sets the minimum wage for entry-level garment workers there at less than $37 a month. By contrast, minimum wages in the leading export nation, China, vary but some provinces have raised them to more than $200, according to the state-run Xinhua news agency.

Fire safety has been a repeated problem at Bangladeshi garment factories, where more than 500 workers have died in fires since 2006, according to estimates compiled by labor groups.

Most large retail chains say they use outside monitors to inspect factories at least once a year and cancel orders if they repeatedly discover problems. The monitors inspect factories retailers have directly contracted to make their goods, as well as factories used by their suppliers.

Photos: Bangladesh Factory Fire

But critics, primarily labor-rights organizations opposed to what they say are sweatshop working conditions, say the monitors insulate the retailers from direct responsibility, because retailers rarely disclose when they find factories to be substandard, often choosing to quietly exit them instead. The groups also argue that by constantly shifting work to factories with slightly lower costs, retailers provide no incentive for factory owners to spend additional on improvements such as fire-safety measures that drive up their expenses.

"They cannot just clean their hands and say they didn't know," said Kalpona Akter of the Bangladesh Center for Worker Solidarity, an activist group. "It doesn't make any sense, unless they are totally irresponsible about their codes of conduct or their inspection practices."

Third-party factory auditors, who report findings of substandard conditions back to Western companies, said it was unfair to blame them for failing to stop fires in Bangladesh. Asim Kumar Mondal, a Bangladesh-based manager with German auditor Tüv Süd, said assessors visit factories and make recommendations but have no power to ensure owners comply.

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Police officers gather in front of the burnt building of garment factory Tazreen Fashions on Nov. 28.
Reuters

Tüv Süd didn't conduct audits of Tazreen Fashions' factory and doesn't currently work on behalf of Wal-Mart in Bangladesh, Mr. Mondal said.

Wal-Mart's system of inspecting factories grades them on a color scheme ranging from green to red. It said most of the audits are done by outside firms, though Wal-Mart has an internal team that conducts surprise audits and checks factories with known problems. Factories with repeated bad grades can be banned from doing business with the company.

Wal-Mart said it is the responsibility of the suppliers to use factories approved by the company, and warns suppliers in an extensive manual that they can be banned from doing business with the retailer if they fail to do so.

The retailer, which works with 100,000 suppliers, said it required them last year to stop using 155 factories; roughly a third were in Bangladesh, and were banned because of concerns about fire safety.

The website of the Tazreen factory's parent company, Tuba Group, contains what appears to be a 2011 inspection letter from Wal-Mart, warning that the factory was in danger of losing orders. Wal-Mart would not confirm the authenticity of the letter.

The company also declined to comment on whether it had notified the Bangladesh government about potential fire safety issues at the factory. Spokesman Kevin Gardner said Wal-Mart has "extensively engaged with the Bangladeshi government and trade organizations in Bangladesh to address fire safety."

Sears Holdings Corp.SHLD1.22% also said it didn't know its clothing was being made at the Tazreen factory and said it had fired what it said was the supplier responsible, International Intimates Inc. The New York-based supplier didn't respond to requests for comment.

"Our merchandise was being produced at that factory without our approval," Sears said.

After 29 workers died during a fire at a Bangladeshi factory called That's It Sportswear two years ago, PVH Corp.PVH-0.10%, the maker of Izod and Calvin Klein clothing, agreed to a comprehensive fire-safety program with activists that includes releasing inspection results to the public.

Gap Inc.,GPS1.19% whose clothes had also been made at the site of the 2010 fire, said it plans to conduct its own fire-safety-specific audits of Bangladesh suppliers starting in January and will disclose the results to the Bangladesh government as well as to a United Nations agency.

"The primary thing is to have fire-safety inspections done by someone with expertise that will look beyond an auditor," said Bobbi Silten, Gap's senior vice president of global responsibility. The retailer will make a total amount of up to $20 million in capital available to factories for safety improvements, she said.

Corrections & Amplifications Gap Inc. will make up to $20 million in capital available across its factory base for safety improvements. An earlier version of this article incorrectly said the retailer will lend up to $20 million per manufacturer to help factories make improvements.

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